Crypto Analysis: VeChain (VET)

Summary

  • Project name: VeChain
  • Token name: VET
  • Ticker symbol: VET
  • Token Type: ERC20
  • Consensus: Proof of Authority
  • Exchanges: 12+
  • Market Cap: $220,700,932 USD as of 10/02
  • Circulating Supply: 55,454,734,800 VET
  • Total Supply: 86,712,634,466 VET
vechain

Overview

VeChain is a B2B focused blockchain enterprise that seeks to improve and revolutionize supply chain management, comprehensive governance and IoT integrations. The project seeks to enable the identification, tracking and monitoring of different products manufactured across the globe. Assigning unique identifiers to products and putting them on their blockchain will allow for the identification of the participant in the supply chain of the product from manufacturing to the hands of the customer as well as the real provenance of where this product has come from. For example, VeChain is looking to help fashion and luxury consumer goods brands fight counterfeit which constitute almost 10% of annual sales in Europe. By tagging products and goods from their supply chains and tracking them on their blockchain platform, the real provenance of goods can be tracked in real time. The company’s original vision is to build a “trust-free and distributed business ecosystem platform that enables transparent information flow, efficient collaboration and high-speed value transfers.“* In the creation of the platform, the VeChain team seeks to deal with major enterprise adoption hurdles in the space. These include the governance & economic model as well as the use of different technologies and regulatory flexibility.

Product

The product the VeChain team is building is the VeChain Thor Blockchain platform which will serve to facilitate all interactions and transactions in the ecosystem of the supply-chain management ecosystem by massively reducing costs and bringing end-to-end transparency. The company is planning to revolutionize the industry and realise substantial social benefits from tracking products and services. Trust is the biggest cost of doing business and through the use of a blockchain platform that is cryptographically secured, businesses can focus on improving their products and services rather than their transaction. Systems integrations and business collaboration within the supply chain in its current state are inefficient, complex and error-prone. Issues associated with the current systems such as those pertaining to data security, business confidentiality, privacy and legal liability between the brands, manufacturers, distributors, retailers, consumers and service providers. The VeChain Foundation is a nonprofit entity that has a unique governance model in which the Board of Steering Committee that is selected by token holders decides on critical strategies and the different operational units. In terms of the economic model, VeChain has isolated the transaction fees from the volatility of the VET  tokens. This offers price stability and transaction predictability between the stakeholders. On the figure below, we can see the difference between the current centralised permission system of data sharing compared with a tamper-proof one that is easily accessible by all stakeholders and immutable on the blockchain.

platform

Key features:

  • VeChain Thor Platform stakeholders – business owners, application service providers, smart contract providers, infrastructure providers, VeChain foundation & the VeChain community
  • VeChain Token (VET) & VeChainThor Energy (VTHO) – tokens of the network carrying value and programmable in smart contracts
  • Consensus mechanism – Proof of Authority (PoA) that offers low computational power requirements, no requirement for communication between nodes to reach consensus, and is optimized for system continuity
  • State-of-the-art IoT Solutions
  • High Scalability & Sidechain Capability

Management

The team members of VeChain come from different industries and countries where solid educational background, expertise and decades of combined experience work on solving the businesses goals and mission statement. Jianliang Gu, CTO is an ex-Technical Director in TCL and graduate from Shanghai University. Sunny Lu is the CEO and co-founder also graduate from Shanghai University ex-CIO of LV China. Other senior management and c-suite executives coming from PwC, HP, Deloitte. Investors featured on the website include – Fenbushi Capital, Draper Dragon & Brever Capital. These are some very serious funds that have done extensive research and vetting on anything they put money in. Fenbushi Capital is one of the biggest blockchain focus VC funds with Vitalik Buterin on his advisory board. In addition, the project has secured many tier 1 partnerships that include PwC, DNV.GL, AWS, China Unicom, DB Shenker, BMW, Renault.

Development

The technical development of the blockchain project is led by Jianliang Gu and his team of in-house and remote developers. Bin Qian is the chief blockchain developer who works closely with Peter Zhou as a Chief Scientist. The main public Github repository for VeChain has 4 main developers working on with 26 different repos. The main VeChain Thor repo written in Go has more than 2500+ commits, 11 contributors and 300+ stars.

A Gitter channel is available with developers and enthusiast alike willing to offer a helping hand to open source contributors or curious enthusiasts.

Community

VeChain actively shares public announcements and project developments on a number of social channels including Facebook, Wechat and Weibo. Despite being headquartered in Asia. The community team maintains a strong relationship and project following in the West. VeChain releases regular blog posts communicating developments with its followers on Medium. The page has more than 9,000 followers and monthly posts with the latest covering new partnerships with AWS and expansion of the company into North America and Europe. (as of 18/02/19) Moreover, the foundation also communicates the yearly financial report with its community through medium giving a clear understanding of the financial position, tokenomics and expenditure of the group. There is also regular video correspondence on YouTube with 6.1k followers where the team presents tech deep dives and project updates. The twitter account has 104k followers with over 500 tweets while the reddit channel has more than 54k subscribers. Finally, Telegram – 26,073  & Discord – 5,516 prove to be another great way to connect with the project ask any questions or just monitor the interactions and developments of VeChain.

Strengths

  • Unique governance model with detailed explanation and description within the whitepaper.
  • The economic model that seeks to isolate the transaction fees from token price volatility.
  • Industry-wide use cases in logistics, automobile, transport and luxury goods industries

Weaknesses

  • Concerns that the Proof of Authority consensus mechanism lacks incentivisation

Opportunities

  • VeChain is connected to the largest infrastructure project in human history, China’s One Belt One Road initiative.
  • Special focus on IoT development within the Blockchain

Threats

  • Ambrosus & Waltonchain are proving to be a serious competition coming out with their own competitive product in the supply-chain industry.

Conclusion

VeChain proves to be a solid project, with a great management team and strong community relationships. The team consistently delivered through 2018 signing new partnerships and reaching key development milestones detailed in their roadmap. Clear detailed use cases in many different industries are being implemented and are backed by solid partners within the international business space. The motivation for building this platform is driven by social good and fixing many issues related to the human errors that exist within the supply-chain industry. The foundation serves as a non-profit seeking efficient and sustainable development that is open source. This puts a clear mark on its intentions as well as an example of a blockchain project for social good.

External Resources:

VeChain Website: https://www.vechain.org/

*VeChain Whitepaper: https://cdn.vechain.com/vechainthor_development_plan_and_whitepaper_en_v1.0.pdf

Github: https://github.com/vechain/thor

Blockchain Explorer: https://explore.veforge.com/

Coinmarketcap:  https://coinmarketcap.com/currencies/vechain/

Disclaimer: Opinions are my own and not the views of my employer. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Malta, the Blockchain Island!

There have been loads of developments in the regulation and compliance within the blockchain space recently. In fact, clarity and new laws for this sector have been springing up and growing exponentially in the 2 years. Alongside the new regulations on the treatment of companies and assets in the industry, new jurisdictions have paved the way forward innovating and offering solutions and answers of how to work and deal with the blockchain or distributed ledger technology (DLT) space as it is often referred. One of those jurisdictions trying to lead the innovation and implementation of regulation and laws concerning DLT technology is Malta. One of the fastest growing economies in the EU and the world with 6.6% growth rate for 2018, GDP: 19B, public debt 50% of GDP, an inflation rate of 1.3 % and an unemployment rate of 4.6% *, the country offers the perfect foundations. In addition, to a booming economy, the country has managed to bring in many international DLT companies. The blockchain island. That is how Malta has been deemed by many internationally. From DLT insiders to governmental officials, a sense of security, understanding, and welcome is to be felt by DLT businesses looking to relocate on the island while more than half of the world has a negative or neutral position on having those businesses run from their countries. This small nation nestled on a beautiful rocky island in the Middle of the Mediterranean is offering not only amazing weather all year-around, beautiful beaches, and delicious food, but also the perfect hotbed and legal jurisdiction for blockchain companies. The video content prepared by Cointelegraph gives you a taste of the atmosphere on the island.

Who are some of those big blockchain companies and why are they moving to Malta? A throve of big hitters in the DLT space including two of the largest exchanges Binance & OKex are opening offices and setting up their HQs under the Maltese Jurisdiction and legal frameworks.  The Maltese government have managed to act swiftly into offering the assurance and assistance of business in the industry while trying to understand and communicate with insiders in the space. Three bills have been passed by the Government that creates this favourable environment to set up a blockchain business under the country’s law. The first bill, called Malta Digital Innovation Authority Bill means that the government provides credibility and legal assurance. The second one, the Innovative Technology Arrangements Bill, deals with easing the way of registration and legitimization of a blockchain business in the small nation. The third one is the Services and Virtual Financial Assets Bill that provides a solid framework for cryptocurrencies, ICOs, wallet providers, exchanges and asset managers. With the hope that the legislation will bring more blockchain companies to the island added to favourable tax laws on international corporations with as little as 5% are also a deciding factor for those businesses looking at the island. Moreover, Malta is a strong member of the EU allowing companies that decide to set up business their access to the free trade within the European market. This, of course, will bring along foreign investments and employment opportunities that are vital for a small country with little natural resources or manufacturing facilities. The country has a much bigger plan in place

blockchain-strategy

Although Malta is not only after the financial benefits of bringing blockchain business under its wings. The regulatory and legislative bodies also make careful consideration of the nature of the business seeking to understand and legitimize it rather than accept it unconditionally. Malta is focusing on blockchain technology and its intricacies rather than short financial gains from facilitating cryptocurrency transactions.

malta-485321_1280
Source: One of the main ports of Malta brought by Pixabay

Malta is not only seeking to accommodate blockchain companies rather become an innovation hub for technology entrepreneurs and startups. The island nation has tackled well the last digital trend of business with Gaming and Online Gambling and it is well underway of riding the wave of the new blockchain trend. Moreover, the Maltese are already eyeing up the Artificial Intelligence revolution that is also underway and want to accommodate AI companies alongside the DLT ones. Malta.ai hosts the national initiative towards the development of an AI strategy and encouragement of companies and national policies. This move would create an amalgamation of technology pioneers nestled together in the speck in the Mediterranean working on complicated technological problems seeking to push the technology world forward.

 

*National Economic Data for Malta taken from – https://tradingeconomics.com/malta/gdp-growth

How to launch your own E-commerce store?

The world of commerce is shifting exponentially from a person to person live exchange of products and services in a retail or physical location to the digital. Nowadays if you have a great product that you have created and you wish to get it out to the public it is no longer necessary to dig deep into your pockets looking for cash to rent a brick and mortar store so you can gain visibility in the public and start selling. No longer is needed to put billboards or posters on the streets or give out flyers about your new offering. The world is changing fast and the only thing you need these days to reach out to your customers and sell the great product you have created is a laptop and an internet connection. If you don’t have a great idea about a product you want to sell yet. There are many resources where you can do research and market analysis online. Picking the best products to sell is a big challenge. Many times people would have the product beforehand though more often than not we also have people wanting to start an e-commerce venture without the definite product idea in their mind. Coming up with an adequate product is done through idea generation. Brainstorming and market research in places like AliExpress Most Popular Products, Amazon Best Sellers, eBay Daily Deals, etc. Looking out for popular categories, items, trends, seasonal products or just something that makes sense to you is key. Another key is niching down in with the particular category or product. You need to look to supply niche products that are underserved by larger players. Don’t fight the big stores and try to avoid too broad and general categories. The masses are already exposed to thousands of offers daily. You can also use social shopping sites – There are over 100 million products on Polyvore and 30 million on Wanelo, Fancy, and Pinterest. Find out what is popular what is liked and what are the current and future upcoming trends. Don’t limit yourself to your own research rather speak with friends and discuss your ideas and brainstorming. Add a price filter that gives you enough mark-up on inventory and accounts for marketing costs. Use Google keywords planner and google trends to find out if your idea is actually trending or it is on the rise. Read the search patterns and look for trends. Remember, that you have to avoid any branded products as you may stumble upon faces or copyright infringement laws.

Assuming you have managed to find or create your groundbreaking product and the market to sell to, this article is going to look at what is required for you to create an online e-commerce store where you can sell this product. When we think about e-commerce, names such as Alibaba and Amazon may spring to mind. Although there are 100s of thousands of private label e-commerce stores that sell their unique products. Think of it as your “street corner shop” in the digital world.

home-based-business-checklist
Source

Before you start thinking about your website design and colors you are going to use, creating an initial business plan can greatly boost your success chances. Having a business plan can greatly help you at organizing your ideas, tools, costs and generally putting everything in one place where you can easily refer and develop your next step with your idea. One of the most important aspects of your business plan would be choosing your niche and the product you would like to be selling. Doing a comprehensive market and competition research is of paramount to your success before looking into where would you like to source your product from, how to do the marketing and reach out to your customers. Building out your market research and competitors list using excel alongside additional products is also a great way to brainstorm and progress with your store idea. Summarizing your business and lying down your purpose statement and main drivers and motivation to start your venture can give you a lot of clarity as well as expose any weaknesses in your idea. Creating a business and marketing strategy no matter how small your idea or market is, will allow you to get a full 360 view of your venture. Example content structure that would go into such a business plan can be seen in the picture below.

bp.PNG

You have your business plan now and you know exactly what, where and when is happening. The next big step would be actually registering your idea as a business in your country. That being either a sole proprietorship or a limited company. In the UK, HMRC company registration is done online which also offers a set of instructions, requirements, and support for setting up your venture. Once you have the legal aspect out of the way, the fun part comes in building out your store. Gone are the days of brick and mortars with limited reach to customers and expensive overheads. In a matter of minutes, you can have your very own online store with one of the best and most popular platforms out there – Shopify. One of the best solutions out there that I have personally used is Shopify. The company offers an online e-commerce platform website builder that is suitable for anyone from entrepreneurs, small businesses to high volume large merchants. A sleek website designs available, online support and a host of many different additional features, widgets and apps that come with the platform makes it a stable and flexible solution for your needs.  Alongside a comprehensive ecosystem of different widgets, add-ons, integrations, and apps, Shopify is one of the leaders within the e-commerce space. The Canadian company facilitates many small business owners and entrepreneurs to showcase their products and create a beautiful and sleek online store with great functionalities without having to hire expensive website developers on their payroll. Choosing a theme that aligns with the products and your branding is important in order to gain more visits and convert them to sales. Having a nice logo is also important, but don’t get too focused on this intricacies as the branding tend to change and develop over time. You can get a custom domain aligning with your brand from Shopify, but I also use Namecheap as a great service offering discounts on domains as well. The Google Office suite could provide you with everything you need for your digital office and running the administration of your business. a couple of other tools that I have found very useful and are must-haves, in my opinion, are Asana for project management and a good email marketing system like MailChimp.

Oberlo is a great tool to source products and drop-ship them from China straight away if you are reselling somebody else’s product or if you are looking to add up-sale additional products to your current offering. Oberlo works perfectly with Ali express. Moreover, you control your own margins and you can extract 100s of descriptions and products straight to your store. You are not bound to a suggested retail price (MSRP) and can decide your retail price on your own. You can also start with it immediately, for free. AliExpress dropshipping is possible even without contacting the supplier as the website does your intermediation. You won’t need an established business entity before starting
your online store. Though you will need one when you grow and start making sales each month.

Sales and marketing are one of the hardest parts to get right and one of the most important for running a financially healthy business venture. It’s critical that you have a marketing plan in place in order for your business to get the proper exposure to its customers. Depending on your type of product and customer base some channels for advertising work better than the others. Facebook advertising is possibly the most effective way to promote your products to more than 1.5 billion people around the world. Instagram & Pinterest are great for reaching out an audience base for a particular product or niche while LinkedIn is the go-to tool for B2B sales and professional services. Getting enough traffic to your store will be defined of your marketing toolbox and your understanding of the audience you are selling to. Prior to sending traffic to your eCommerce store, you are going to want to make sure that you have the highest chances of converting each visitor into a  buyer.  There are always going to be many other retailers selling the exact same products as you and most internet shoppers will be visiting at least three of their websites before making a decision on where to purchase from. Optimizing page titles, meta-keywords, meta-descriptions, unique digital content can increase your conversion rates. Yes, ranking high in organic search results will bring you hoards of customers through using different SEO techniques. No, you should not invest heavily (or at all) and hire an SEO company as the break-even point of spending on SEO and doing the basic techniques that are free may suffice.

This was a quick overview of some of the components required for you to kick off your e-commerce venture. Making your e-commerce online store is hard work. To create a sustainable online business, you must be ready to work your buns off. Additionally, an initial chunk of capital has to be committed as well as a good marketing strategy. Some of the biggest challenges that start-ups face are the lack of capital and marketing their products to their customers. You may have a great e-commerce store and product although the marketing of your business can make or break you.

How to run the Finances of a small business or start-up?

Finance can be an intimidating topic. Small businesses and start-ups think that running their Finances is complicated and hard. They think they need to hire a professional, they are not sure about what to put in each account or the tech-stack and software they need to be using. Many times they find themselves dubious on particular tax treatments, monthly and year-end accounts. Moreover, professionals in the space mystify their work using an approach where there is a one-way conversation – them teaching the client, making themselves indispensable and not working with their clients on an equal basis. Good news, the new technology and financial apps ecosystem is bringing this to a halt as running the Finances of a small business or start-up up to a particular size becomes manageable with the right guidance and tech-stack. Cloud Accounting, automating financial operations and taking advantage of different solutions for each part of your Finances can convert the process from a chore into a breeze. In this article, we are going to look at some of the latest Tech that can help you turn your Financial Operations into something easy you do rather than something hard that you don’t look forward to.

Starting off with the basics such as office and computer equipment, you wouldn’t really need anything but a laptop, phone and a co-working space. Gone are the days where you have to sign long-term leases for expensive office spaces as the new wave of co-working space offers flexibility, great facilities, easily scalable, a network and a community of like-minded people. Places like WeWork and CoWorker offer you all the facilities you need where even physical products businesses usually outsourcing their production or using third parties are completely separate from their production operations using these co-working spaces. Moreover, the Microsoft or Google Office suit combined with communication and project management solutions like Asana and Slack can streamline your processes and boost the level of teamwork within your company. The Microsoft and Google office solutions offer cloud storage so you wouldn’t have to worry about the security and accessibility of your company’s data.

When it comes down to you Finances optimum efficiency, automation of daily operations and support for commercial insights should be paramount. This is brought about by an eco-system of financial software solutions. Starting off with your bank and where you keep your cash, the days of traditional banking are numbered and digital contenders are already overtaking the retail space. In terms of commercial banking, there are some solutions that are currently on the market which are far from perfect though are inching in the right direction by the day – Tide, Coconut and Starling Bank for Business. Coconut even goes as far as preparing your accounts and tax embedded in your digital banking. Soon enough you won’t have to worry about your Tax and Year End accounts as these will be automatically generated and prepared by your Accounting system and sent to HMRC or the relevant authority in your country via a secure API access point.

The accounting system that you are going to use for recording your business’s transaction is of crucial importance as there is a lot of products out there that don’t really provide optimal results for your business. From my personal experience depending on the size of your business Xero is the best solution out there. Beautiful design, great user experience and interface paired with secure cloud storage and fast accessibility for your financials this solution should be at the centre of your financial information. Moreover, with a comprehensive Xero Marketplace of external applications that integrate seamlessly, it can really bring massive value. The marketplace’s applications can assist your business in every single domain of its operations. Let’s look at some examples:

  • Accounts receivable – starting with your sales and the money coming in the business there are a number of integrated solutions both for POS and Online payments side. Notable solutions are iZettle on the POS and Stripe for online payments.
  • Accounts Payable
    • Roger – streamlining your invoice payment process with the help of OCR (optical character recognition) reading and extraction of all the details of the invoice automatically (invoice no., date, supplier, VAT, coding, etc.); it then learns as you continue to use it paired with approval flow, payment and automatic reconciliation.
    • Pleo – Pleo is a new service to the UK market which has recently received a significant Investment Round and it is expanding rapidly. It offers pre-paid cards and an app that allows your employees to track and record every single personal expense. You can top-up these cards from your bank account and at the end of the month upload, all the transaction records to your Accounting system via an API. Insight is immediately available and administration time and costs are down to a minimum.
  • Payroll and HR – a new solution coming to the UK that I am particularly excited about is Pento. Pento is a solution that combines all the HR and staff payment processes into one. From onboarding, your staff on the system to getting everyone paid automatically through bank transfers and social security contributions submitted to the HMRC.
  • Financial Reporting – when it comes down to Month End and Yearly reporting Excel still is the king of the game though with the addition of Data Dear which is an Excel Add-on application that pulls your financial data from your Xero software. You can pull down all your financials with the click of a button. This can truly be a gamechanger to the insight generation from your data. Paired with a tool like Fathom that can produce visual insight for the non-financial users of information. You can produce truly outstanding reports and board packs for your investors.

There are many other areas of your business that can be ‘upgraded‘ with the right software in places such as CRM, Inventory, Debtor Tracking, and e-commerce. While being simply an overview of a particular tech stack and approach to your company’s Finances. This article gives you an idea of how to run an efficient, tech-driven Finances of your business in an environment where cost-savings and efficiency are crucial for development and getting ahead of the competition. You can pick and mix different type of additional software from the Xero eco-system or even look into using Voice Assistants and Python open-source programming for automating process and tasks within your business. Bottom line, staying tech-conscious and constantly being willing to change and improve would define your development and performance.

Where can you raise capital for your trading?

You can have the best trading ideas, strategy and implementation, but without sufficient capital to fuel it, it’s just a great idea. Raising capital for your trading becomes important once you have exhausted your funds, you have a solid track record of great performance and opportunities & ideas are everywhere. Once you are really ready to bring in clients money you always need to be cautious as to not oversubscribe investors or even raise too much money that doesn’t really fit in with your strategy. This could be of detriment to you and your ego that may result in underperformance of your strategy. It is not about raising as much money as possible rather raising justified amounts that perfectly fit into your current trading paradigm. Usually, the best way to raise capital is not to do it at all, rather reinvest your profits back in the business and grow organically alongside the market opportunities presenting themselves with time. You can always look into scaling with outside capital if successful at first and have reinvested profits numerous times. Although many times you are spot on with your working ideas and strategies so you have to get that cash injection as soon as possible to keep pushing forward. Even then one must always comply with all the requirements and pre-requisites by investors making sure there is transparency and the promised delivery of results is evident.  A business start-up is it trading or selling physical products shouldn’t be looking for additional rounds of cash without a clear strategy and having reinvested significant amounts of their profits back into the business beforehand. Investors should be wary of companies and start-up funds requiring second rounds of funding in a short period of time one after the other. This is highlighted with ones without significant cashflows or negative performance. For market caps going in the millions where the operations are on a bigger scale and institutional clients come in the growth and scale rates would usually slow down. There wouldn’t be a rush the more the fund/business progresses to raise capital.

Capacity is the amount of equity a strategy can generate good returns on. It is far, far easier to generate a high Sharpe ratio trading a $100,000 account than a $100 million account. There are many simple and profitable strategies that can work at the low capacity end that would be totally unsuitable to hedge funds or any fund in general. (Chan, 2008) On the more practical aspect, algorithmic trading generally requires a far larger capital base that would be utilised for retail discretionary trading, this is simply due to the fact that there are few brokers who support automated trade execution that does not also require large account minimums. The most prolific brokerage in the retail automated space is Interactive Brokers, who require an account balance of $10,000. Furthermore, the Pattern Day Trader requirements as defined by the Securities and Exchange Commission require a minimum of $25,000 in account equity to be maintained at all times, in certain margin situations.

If you are not completely familiar with the sources of capital or the ways to approach them, you might need a dedicated professional who would assist you in this matter. Fundraising and Investors relations is a subject area that requires a high level of skills, manners and most important networks. Being able to communicate your idea, strategy or business in the right way and to the right audience can make or break your capital raising process. Most of the times the founder or the main company officer would act as the fundraiser where trusted associates with appropriate networks may bring additional value and capital. Moreover, investors would also expect the generator of the strategies or business to be able to stand behind any proposal with an equal or significantly high proportional base of capital as well. As the old saying goes “you have to put your money where your mouth is“. Additionally, founders and people with significant interest and control in the business putting a large portion of capital or proportion of their whole net-worth behind a trading strategy or business provides a real reassurance and guarantees commitment and confidence in the venture. Alignment of interest between the management and the investor should be demonstrated by the founder’s/management commitment of capital at all times.  In addition, the due diligence performed on the team behind the trading business is of great importance as well. Important factors are ones such as previous educational and qualification background, verified track record and past experience. On-boarded advisors and partners that can help you raise funds and run your business are also of crucial importance. You can also attract investors with your unique cost structure.

Potential Sources of Investors:

  1. Non-institutional capital sources
  • Friends and Families – The first people most would refer to in their fundraising process start with friends and family. As these are trusted sources and no due diligence is required on their side it makes it fast and easy source of capital. Although this is restricted by the particular size of capital that can be committed. This makes for a great start as well as the support of relatives received, but it puts additional pressure and really tests your confidence in your performance and strategies. You are putting forward more than reputation or clients’ money on the line – healthy relationships if things are to go wrong. 
  • Retail Investors & Peers in the Industry can substitute a great knowledgeable investor in your start-up that may also bring fresh advice and ideas to the table.
  • Private Accredited Investors in the face of Ultra-High Net-worth Individuals(UHNI) and High Net-worth Individuals(HNI) – minimum due diligence as they would come prepared with their KYC/ AML and credentials. the amount of attention and requirements they have to contribute to your business. They also require constant attention and keeping up the relationship and the ongoing roadmap and progress.
  • Venture Capital (VC) /Seeders/Angel Investors are a great source of initial capital that comes with its costs. Angel Investors would usually have experience in the particular fund/strategy/business or have had their previous exit in a very similar company. They will bring along a myriad of knowledge, experience and advice as well as marketing and operational guidance. Although they would also require larger and deeper checks and due diligence passed as well as share revenue or equity in the company. Many business owners find it hard at first to give away part of their coveted companies at the start.
  • Financial Advisors – can bring a good amount of capital if you are willing to pay the price and really spend the time to build a proper relationship and connection with them. On the downside, they may only bring the capital without the connection with investors or advisory assistance. 
  1. Institutional Capital Sources
  • Family Offices are usually set up by a number of wealthy families, investment professionals or wealthy individuals who have gathered together to manage their fortune and grow the value of their portfolios together. They would usually bring a large amount of capital knowledge and sophisticated risk management. One of their main targets is the preservation and growth of their capital. They would be very cautious and require a lot of relationship building and due diligence passed.
  • Funds of funds would have a sophisticated investment team with professionals that have a proven track record and credentials. It may take a long period of time before a fund of funds invests in your fund as they would require all the traditional checks as well as close monitoring of the operations and performance of the fund for a set amount of time before committing capital.
  • Foundations and endowments manage assets for non-profit organisations which are very cautious about where exactly they invest due to significant reputational, ethical and moral standards that they have to comply with considering the source of their capital. These organisations would usually have a long-term time frame and very low turnover of investment vehicles they put money in. Great risk controls, infrastructure and years of proven track records would be some of their main requirements which make them a very unlikely source of funds for a start-up investment business.
  • Pension Funds are quite similar in their investment and decision-making process to the foundations and endowments as they have long-term views requiring low volatility strategies and consistent returns. As these funds manage the pension pots of many companies through different industries they are super sensitive to where they invest and their requirements are high making them also an unlikely start-up funder.
  • Sovereign Wealth Funds would be usually one of the biggest investment funds with whole countries behind them and massive amounts of capital to invest. Very large size, long track record and significant connection with the particular fund/government would be required to get in capital from these vehicles. If you are not one of the biggest funds out there it is unlikely that you would ever cross paths with these funds.

References: